Property Predictions: UK Recession

Brett Alegre-wood
August 5, 2022

Video Transcription

Hey guys, so let's talk about current issues. And one of the current issues on everyone's mind is obviously, the recession or not recession depends where you're looking. So certainly the US is in recession, normally, they say, when the US cash is the, you know, the US sneezes, the world catches a cold. That's not necessarily the case anymore. We are progressively detaching from the US, they have much bigger and much more wider issues, although very similar issues to what we have in the UK too. But their lead in how they got to where they are, and their debt load and a few things that are a little bit different. They, you know, look, I'm not here to talk about the US anyway, because to be fair, they are a basket case, they are an empire in decline, and they're going to do whatever they can to fight to keep the rich, rich and the poor, controlled. And unfortunately, that's the theme for most countries now through COVID. You know, whether you like it or not, your freedoms are being, you know, whittled away and taken away freedom of speech, freedom of, or freedom of movement, even, you know, I mean, it's just amazing how this is happening anyway, that's not what it's about. It's about recession. So October 2022, that's when UK I think, will potentially go into recession, some orderly start to slow down. So you'll start to notice a recession, you'll start to hear a lot more, it may not go into recession, October, it may be sometime over the next six months, because technically, a recession is through to the quarters. Yeah, six months of negative growth. All right. So we've not really had that yet, we had point two, so we're certainly slowing down, things are slowing down. But there's still a lot of optimism there. Okay, which is good for us. And there's so much that's going on right now, really to unpack it is extremely hard to pick, when we're going to go into recession is actually a really, really hard thing to do. And I'll be talking about this sort of stuff for years, you know, making predictions. And normally, you know, I can pretty much get it on the nose. This time, I have to say there's so much going on, from a worldwide stage from geopolitical to everything, environmental through to rebellion through to, you know, all this sort of stuff that when you've got to weigh in all these factors, it makes it a lot harder. But look, bottom line is I think we'll get through summer. Okay, I think it will start to cool then. So I think come October, potentially, we'll start to see things cool off, where there'd be the property market all that now, do I think it's going to drop in massive decline? I don't think for the UK certain, I think I think some other countries have got some serious hard times ahead. Potentially, interest rates will go up. But I think with interest rates, and there's another video on this and the current issues, but at the iterating can go up quickly. And then they'll also come down quickly. Because I think the reality with governments is right now they have three choices, okay. And really, this is what they've got austerity. In other words, stop spending, okay, they've got default, which nobody wants to default, or they're places like Sri Lanka. And there's a number of places that are going to default to follow, okay, where their debt load is just way too ridiculous, there's no way they can pay it back to the only way they can do is to default.Brett Alegre-Wood 3:22 And then finally, deflation. And really to deflate the debt to deflate the bubble. And make no mistake, austerity is not something that governments will be able to tolerate. And I'll tell you, because people are going to rebel, just as we've seen people starting to rebel with the COVID side of things, people are on edge. And so austerity is not really an option. Default is not really an option. Okay? Because the contagion is wonderful to the large country defaults that could, you know, see other countries fault, the whole financial system, the whole financial system is changing. We do another video on that. It's actually we're a massive precipice now of where things are, not only is there the major Empire, the US that is in decline, there's still got lots of kicker left in them, don't worry about that. We've got you know, China and Russia challenges, and then there's a whole lot of geopolitical, all this sort of stuff happening, the only option they've got is to deflate it, you know what that means? That means allowing inflation to run higher there than they may like, where that means they reset targets with that means they just react slowly, and they keep it a bit higher, because obviously, this debt load that they have has to be dealt with some way and the only way they can really do that is by paying it back. Okay. Or deflating it. Yeah. Not paying it back is not an option. That's the fault. Yeah. Austerity, in other words, paying it back. So not putting money into funding things in his that I'm in the UK, we've already been through a decade of austerity. It didn't work. And it doesn't work. You know, and it's appalling to think that a government actually thought that it would, you know, but so deflation is the own The option that they've got. Now interestingly, for me, what I'm thinking and what I'm looking at is, I think we had COVID, massive drop, I think we've had a massive uptake, quickly, you know, quickly rebound, and that was through stimulus. So I don't have a problem with that. But if you look at it, and if you actually take out the drop in the rays, and you look at the trend line, the trend line actually isn't that bad in terms of growth? Yeah. Now we do a correction. Yeah, potentially, we do a correction, you know, so that's likely to happen. But it may not be as bad as a lot of people predicting, and I think that's why there's economists on both sides of the fence now, and where I sit is kinda, it's in the middle. And if you look at my predictions from last year, you know, they're pretty much been spot on. In fact, the last, you know, four or five years have been pretty much spot on. And it's not been drastically up or drastically down. And a lot of people were saying, you know, London's Tumbleweed London, London's that, and that clearly hasn't been the case, you know? So there's a lot of things like that, look, make no mistake, things are pretty bad. And if you're sitting out there, the question you have to ask yourself about recession is, is your job safe? Are you going to be able to maintain your income, if you're not going to be able to maintain your income, then you've got to do something about it. Okay. So that's the first thing you need to worry about is things are already bad. Yeah, energy is gonna get bad. But if you think about it, we had bad, we had a sturdy for 10 years, we had Brexit, we've been sitting there self harming ourselves for the last decade, that now is going to keep things low. Which means that actually, we don't have that far or that much far to fall. Okay, versus some other countries that I think have got some pain coming. All right. Now, yes, we have debt, yes, we have all these sort of things. But you know, actually, it's not too bad. Now, the positive things is we've got high employment, we've got lots of people employed with lots of jobs out there. Okay, that's good, certainly going into a recession. But what you'll find is, when we do hit that recession, that's when you'll start to shed those jobs. And remember, it normally takes about two years, 18 months or two years to get those people re housed into new jobs. Okay, and the economy changing. But we have a number of factors. Yeah, the financial system is starting to buckle under all this debt. Okay, we've got inflation, and inflation is going to start to bite, especially in the UK, when we hit winter. I mean, we've been in summer, it's been a great summer. So actually, even though the energy bills have gone up, they haven't gone up like they're going to in winter, so we're going to be cautious about that. Because that will take money out of people's pockets, slowly economy down. And that's where we could nosedive into a recession. And that's where you may find interest rates that are going up or coming down relatively quickly. And that's really my prediction for that is that interest rates are going to start to bite, they're gonna keep increasing them, because they are trying to, you know, curb and flood deflation, or inflation. But really, they want the inflation because it gets rid of their debt, you know, So make no mistake, it's not a case, they want to get rid of it entirely. They want inflation to pay down their debt. All right. Now, if you're holding debt, that's a good thing for you. What you got to worry about is your cash flow going to be okay? While this period of high interest rates is there, while this period of uncertainty in job market and you know, in those sort of things, if your job safe, if you're fine, then actually, it's going to be a great time to pick up some bargains, because actually, you're likely to have some bargains, and some people will not be able to keep up their payments. Okay. So that's my take on the recession. For what is it now August 2022. So we'll see what happens in October, somewhere between October and March, we may find that actually, we don't hit recession until March, which is six months after? All right? What just at the time, when actually, we hit summer, which is normally we have this spring bounce. So that may work in our favour. And that's why I think recession is not a foregone conclusion, we may actually pull this off. Okay, yes, have a slow through October through March. But then we may actually come through that and pick up on things. So let's see what happens. Anyway, I'll keep you abreast of things. 

So let's just quickly if you've got any questions on that, what you can do is just down on this page, I think it's just underneath. You've got the ability just to write your question in there. And what I can do, I can do a video and posted on social media. So everyone can benefit from those answers. So feel free if you want to pop your questions down there. Otherwise, jump across into one of the other current issues that we're facing right now. And my take on them and hopefully gives you a really good understanding from a property inspectors point of view, inspectors investor's point of view. See you guys bye

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Tags

house prices, inflation, Interest Rates, Property Prices, UK Recession


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